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FAREED ZAKARIA, CNN HOST: This is GPS, the GLOBAL PUBLIC SQUARE. Welcome to all of you in the United States and around the world. I'm Fareed Zakaria.

We have an important very special show for you. An hour with the president of the United States, Barack Obama. We met in New Delhi where he was on a state visit and we had a frank, wide ranging conversation. From Islamic terrorism --

(BEGIN VIDEO CLIP)

ZAKARIA: Are we in a war with radical Islam?

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ZAKARIA: To drones on the White House lawn. From nuclear talks with Iran.

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BARACK OBAMA, PRESIDENT OF THE UNITED STATES: For us to undermine diplomacy is a mistake.

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ZAKARIA: To Prime Minister Netanyahu's end run around the White House. From America's increasing comfort with authoritarian regimes to China's discomfort with burgeoning Indo-U.S. friendship. From Russia's failing economy to Russia's successful efforts to destabilize Ukraine.

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OBAMA: There's no formula in which this ends up being good for Russia.

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ZAKARIA: It's an interview you don't want to miss.

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OBAMA: There are costs to the decisions that we make.

(END VIDEO CLIP) ZAKARIA: But first here is my take.

President Obama's trip this week to India was strategically important, symbolically resonant, and deftly executed. But it's coinciding with a snowstorm in some northeastern states, so it struggled to get air time and ink in the United States.

In India, on the other hand, newspapers devoted pages to the visit every day. And television coverage was wall-to-wall. It even got the attention of the Chinese government which denounced the new friendship.

Obama's trip highlights some opportunity and a problem. Foreign policy consists of two elements, negative and positive. Negative foreign policy is about preventing bad things from happening, confronting dangers and dealing with bad guys. It's the stuff that makes the front page in the evening broadcast.

Positive foreign policy is focused on the upside. It's about building new relationships, expanding markets and opportunities, strengthening alliances and values.

Obama's India trip was a perfect example of positive foreign policy. The United States has been forging new tries to India since the Clinton administration. But President Obama's decision to attend India's Republic Day marked a tipping point.

India has gone from being a country 30 years ago that was reflexively anti-American to one that is increasingly pro-American. Indian society has long been attracted to America. But in recent years the Indian government has been moving away from its encrusted ideology of nonalignment to something more practical.

India's energetic new prime minister, Narendra Modi, has pushed his government in an unambiguously pro-American direction.

Bringing India closer to the United States should have broad benefits for Washington and the world. With over 1.2 billion people, India is likely to become the next global Goliath. While it will probably never grow as fast as China, because of its size, even 7 percent growth, say, over the next two decades would give it a loud voice in the world's councils of power.

India is the most significant example of the benefits of positive foreign policy but there are other important ones as well. The most remarkable opportunity presents itself in Mexico. Thirty years ago Mexico was defined by its anti-Americanism. Today it is a different country. Its economy is closely linked to its neighbor to the north, its politicians regard America as their natural partner and the culture has become Americanized in so many respects.

The upsides of success are significant. If the United States can partner with India along with Indonesia and Japan, it is far more likely that Asia and the world will be characterized by free trade, multilateralism, and rules-based international systems. A deeper set of ties between the U.S., Mexico and Canada could create a North American economic and political union of sorts that will be more interconnected, vibrant and powerful than any regional bloc in the world.

But all of this takes time and effort. Pushing these countries to reform is hard work. Showing up remains vital especially in Asia. The constant drumbeat to deal with the crisis du jour fails to recognize opportunity costs. Every day spent on one more band of thugs in the Middle East is a day that cannot be spent on India or Mexico.

Asia, Latin America, and Africa are all moving in the right direction. But these trends are not automatic or self-sustaining. They require Washington to be engaged and assertive and also need a political and media climate in which the urgent does not always trump the important.

For more, go to CNN.com/fareed and read my "Washington Post" column this week.

Let's get started with my interview with President Obama.

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ZAKARIA: Mr. President, honor to have you.

OBAMA: Good to see you, Fareed.

ZAKARIA: Lindsey Graham says that he's bothered by the fact that you won't admit that we're in a religious war. There are others who say that the White House takes pains to avoid using the term "Islamic terrorists."

So my question to you is, are we in -- are we in a war with radical Islam?

OBAMA: You know, I think that the way to understand this is there is an element growing out of Muslim communities in certain parts of the world that have perverted the religion, have embraced a nihilistic, violent, almost medieval interpretation of Islam. And they are doing damage in a lot of countries around the world.

But it is absolutely true that I reject a notion that somehow that creates a religious war because the overwhelming majority of Muslims reject that interpretation of Islam. They don't even recognize it as being Islam. And I think that for us to be successful in fighting this scourge, it's very important for us to align ourselves with the 99.9 percent of Muslims who are looking for the same thing we're looking for. Order, peace, prosperity.

And so I don't -- I don't quibble with labels. I think we all recognize that this is a particular problem that has roots in Muslim communities. And that the Middle East and South Asia are -- it's very ground zero for us needing to win back hearts and minds particularly when it comes to young people. But I think we do ourselves a disservice in this fight if we are not taking into account the fact that the overwhelming majority of Muslims reject this ideology. ZAKARIA: Others say that you downplay the importance of

terrorism. You want to downgrade it as a threat to the United States.

OBAMA: Why -- look, I have to talk to the families of those who are killed by terrorists. I have to talk to the families of soldiers of ours who fought to make sure al Qaeda and the Fatah couldn't carry out attacks against us again. So I think I'm pretty mindful of the terrible costs of terrorism around the world.

What I do insist on is that we maintain a proper perspective and that we do not provide a victory to these terrorist networks by overinflating their importance and suggesting in some fashion that they are an existential threat to the United States or the world order. You know, the truth of the matter is that they can do harm. But we have the capacity to control how we respond in ways that do not undercut what's the -- you know, what's essence of who we are.

That means that we don't torture, for example, and thereby undermine our values and credibility around the world. It means that we don't approach this with a strategy of sending out occupying armies and playing Whac-A-Mole wherever a terrorist group appears because that drains our economic strength and it puts enormous burdens on our military.

What's required is a surgical, precise response to a very specific problem. And if we do that effectively, then ultimately these terrorist organizations will be defeated because they don't have a vision that appeals to ordinary people. It is -- it really is, as has been described in some cases, a death cult, or an entirely backward looking fantasy that can't function in the world.

When you look at ISIL, it has no governing strategy. It can talk about sitting up the new caliphate but nobody is under any illusions that they can actually, you know, sustain or feed people or educate people or organize a society that would work. And so we can't give them the victory of overinflating what they do, and we can't make the mistake of being reactive to them. We have to have a precise strategy in terms of how to defeat them.

ZAKARIA: Americans have been very interested to hear about this drone that landed in the White House, your backyard, where you and your family lives. Are you confident that you understand how you would prevent the next one from being armed?

OBAMA: Well, this is a broader problem. I'll leave the Secret Service to talk about this particular event. But I've actually asked the FAA and a number of agencies to examine how are we managing this new technology. Because the drone that landed in the White House, you buy at RadioShack.

Do you know that there are companies like Amazon that are talking about using small drones to deliver packages. There are incredibly useful functions that these drones can play in terms of, you know, farmers who are managing crops and, you know, conservationists who want to, you know, take stock of wildlife. So there are a whole range of things we can do with it. But we

don't really have any kind of regulatory structure at all for it. So I've assigned some of the relevant agencies to start talking to stakeholders and figure out how we're going to put an architecture in place that make sure that these things aren't dangerous and that they're not violating people's privacy.

In -- you know, in some ways, Fareed, this is similar to what's happened in cyberspace. These technologies that we're developing have the capacity to empower individuals in ways that we couldn't even imagine 10, 15 years ago. But we don't yet have the legal structures and the architecture both globally and within individual countries to manage them the way that -- we need to.

And part of my job over the past several years and over the next couple of years that I'm still in office is seeing if we can start providing some sort of framework that ensures that we get the good and minimize the bad.

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ZAKARIA: Next on GPS, the president on Bibi and Boehner, after the speaker invited the prime minister to address the U.S. Congress.

President Obama has said he won't meet with Netanyahu when he comes to town in March. Why not?

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OBAMA: I think that's inappropriate.

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ZAKARIA: He'll explain when we come back.

And later we'll talk about another thorn in President Obama's side. Russian President Putin. I'll be on the road to (inaudible) between Russia and the West?

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ZAKARIA: The relationship between President Obama and Israel's Prime Minister Benjamin Netanyahu can be described as tense at best. That was ratcheted up even more when it was announced last week that the speaker of the House, John Boehner, had invited the prime minister to speak directly to Congress about a potential Iran nuclear deal.

Obama's administration has been working feverishly to strike a deal with Iran ever since November 2013 when such an accord first seemed possible.

So what was the president's reaction to the prime minister's plans. Listen in.

(BEGIN VIDEOTAPE) ZAKARIA: Last week it was announced that the Israeli Prime

Minister Benjamin Netanyahu is going to come to Washington and do a joint session of Congress at the invitation of the Republican speaker of the House. Many people, I think, this is a rebuttal of your arguments about negotiations with Iran, quote, "the possible deal with Iran."

Do you think it's appropriate for him to come in this manner at this time to Washington?

OBAMA: Well, I'll let Mr. Boehner answer that and Mr. Netanyahu. I speak with Prime Minister Netanyahu all the time. We're declining to meet with him, I'm declining to meet with him simply because our general policy is we don't meet with any world leader two weeks before their election. I think that's inappropriate. And that's true with some of our closest allies.

David Cameron who's got an election coming up recently came to visit because we insisted that if he wants to come, and it was a very important meeting, he needs to be far away enough from the election that it doesn't look like in some ways we're meddling or putting our thumbs on the scale.

To the broader issue, Fareed, I don't think there's been any rebuttal of my argument. I haven't heard a persuasive rebuttal of my argument that we crafted very effective sanctions against Iran specifically to bring them to the negotiations table to see if we could resolve the Iranian nuclear issue through diplomatic means. By all accounts, including the accounts of Israeli intelligence, Iran has abided by the terms of this interim agreement.

They have not advanced their nuclear program. They have actually rolled back their stockpiles of highly enriched uranium. And so we have lost nothing during this period of negotiations. Iran's program has not advanced. And we had the chance of providing a mechanism where we can verify that Iran doesn't have a nuclear weapon and Iran has the ability over time to reenter the community of nations as a responsible player.

Now I don't know that we're going to be able to get that done. But my argument is for the United States Congress to insist on imposing new sanctions that all our partners, as well as the Iranians can interpret as a violation of the interim agreement. For us to undermine diplomacy at this critical time for no good reason is a mistake.

And that what we need to do is to finish up this round of negotiations, put the pressure on Iran to say yes to what the international community is falling for, and what's been remarkable with the unity we've been able to maintain in the P5 Plus 1, even with Russia given all the strains that we have with them, China which obviously has a great hunger for Iranian oil. We've still been able to maintain that unity which shows how effective our diplomats have been.

And if in fact we don't get a deal, make sure that it's the Iranians fault because they couldn't say yes to a reasonable deal. And so I haven't -- I haven't heard a good counter-argument yet. I will veto legislation, if it comes up, that imposes additional sanctions. And by the way, what I've said to members of Congress and what I've said to the Israelis is the day after Iran walks away from a reasonable deal, the easiest thing for me to do in Congress is pass additional sanctions against Iran.

It would take about two days for me to be able to sign a bill like that. So we have ability to exert additional pressure. But it's important for us to show that we've exhausted every possible avenue of diplomatic resolution.

ZAKARIA: But if you listen to what people are saying in Congress about the prospective deal. I think everyone knows where it is, somewhere in the range of 5,000 to 6,000 centrifuges, it seems almost any deal you're going to bring to this Republican Senate, they are not going to go for.

OBAMA: Well --

ZAKARIA: Doesn't it doom the negotiations?

OBAMA: I think it's important for us to actually have a deal in place, and then make an argument for what the deal is. I've said before that we will take no deal over a bad deal. But if I can prove that the deal we've put in place assures us through indisputable verification mechanisms that Iran cannot achieve breakout capacity, if I've got a bunch of scientists and nuclear experts saying this assures us that Iran is not on the brink of being a nuclear weapons power, then that's a public debate we should have.

And I will then ask every member of Congress to ask why would we reject that deal and prefer a potential military option that would be less effective in constraining Iran's nuclear program and would have extraordinary ramifications at a time when we've already got too many conflicts in the Middle East. And I'm pretty confident I can win that argument.

(END VIDEOTAPE)

ZAKARIA: Next on GPS, President Obama made a special trip this week to meet with the new king of Saudi Arabia, and his administration continues to support General Sisi in Egypt.

So is the United States back to getting in bed with authoritarian regions?

I'll ask President Obama that when we come back.

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ZAKARIA: The United States must fight terrorists. But in doing so, does it have to ally with dictatorships and absolute monarchies?

I asked President Obama to explain what looked like a shift in his views and his policy. (BEGIN VIDEOTAPE)

ZAKARIA: In 2011 during the Arab spring, you said that authoritarian regimes offered the illusion of stability but they actually produce a lot of problems, in fact breed terrorists.

OBAMA: Right.

ZAKARIA: Now Secretary of State Kerry praises General Sisi of Egypt. You affirmed the relationship with Saudi Arabia. The administration works with dictatorships in Central Asia, absolute monarchies in the Middle East.

Is the theory of authoritarian stability back?

OBAMA: Well, no, I don't think so. I think that if you look at all my statements, what I've always said is that in applying U.S. foreign policy, we can never operate as if the world as it is doesn't exist. We've got friends and allies who help us with strategic interests, who also engage in practices that don't meet our test of human rights or democracy. And what we can do is encourage them to move in a new direction.

But, you know, oftentimes we're going to have to make decisions based on the here and now and our strategic interests. What I continue to believe is that an authoritarian model in this day and age is going to be less and less sustainable. And I think we've seen evidence of that around the world. Part of it is just the flow of information.

Authoritarianism to some degree depends on the ignorance of people. And the Internet and social media means people have access to information. Authoritarian regions rely, to a large extent, on tamping down people's expectations. People's expectations are constantly rising today, especially among young people. And so a government model that does not rely ultimately on the legitimacy and consent but rather relies on force is not ultimately going to be effective.

ZAKARIA: Let me ask you about this trip. It's been striking, it's clearly gone very well. But already the Chinese government has twice in three days criticized both the United States and India. Is this the start of a kind of new geopolitics of Asia?

OBAMA: I was surprised when I heard that the Chinese government had put out these statements. I visited China just a while back and had some very successful meetings with the president Xi. China doesn't need to be threatened because we have good relations with India. My belief is that in this moment in history, there's an opportunity to create a win-win formula in which all countries are abiding by a common set of rules and standards and we're focused on lifting up prosperity for our people, not at the expense of others, but together with each other. And that's what my discussions with Prime Minister Modi have focused on.

I've continually emphasized that it is very much in America's interest to see China - continue with its peaceful rise. What's dangerous for us is a destabilized and impoverished and disintegrating China. It's much better for us if China is doing well. But what we've said since the start of my term in office is China's growth shouldn't be at the expense of other folks. It shouldn't bully small countries like Vietnam or Philippines around maritime issues, but try to resolve those peacefully in accordance with international law. It shouldn't manipulate its currencies to get itself trading advantages that others don't have.

And sometimes we've been successful in getting a response from China on those issues. Sometimes less so. But I care deeply about China's success. And I want to make sure that we continue to maintain a constructive relationship. There's no doubt that there are aspects of India that make us closer to India. Specifically, it's a democracy and it reflects the values and aspirations as well as some of the warts of our own country in a way that China could not.

And so that I think there's an affinity there that I feel personally and I think the American people feel as well.

(END VIDEOTAPE)

ZAKARIA: Next on "GPS," President Obama on President Putin and whether the chills of what might be a new Cold War could ever turn into a hot war.

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OBAMA: I don't think that it would be wise for the United States or the world to see an actual military conflict between the United States and Russia.

(END VIDEO CLIP)

ZAKARIA: But is Putin ready to come in from the cold? When we come back.

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ZAKARIA: Next month will mark a year since Russia annexed Crimea. In despite ever tightening sanctions in an ever-worsening Russian economy, Moscow continues to send arms, supplies and by some accounts troops into eastern Ukraine. I asked President Obama how he thought the situation would ever get resolved.

(BEGIN VIDEO CLIP)

ZAKARIA: Would it be fair to say that with regard to Russia your policy has been pretty effective in imposing real costs on the Russian economy, but it has not deterred Vladimir Putin from creating instability in Ukraine. Conflict seems to have even escalated in the last few weeks?

OBAMA: I think that's entirely fair. And I think that is a testament to the bad decisions that Mr. Putin is making on behalf of his country. You know, you think about where we've been in terms of U.S.-Russian relations. When I came into office, we talked about reset. And I established I think an effective working relationship with Mr. Medvedev. And as a consequence, Russia's economy was growing. They had the opportunity to begin diversifying their economy. Their relations across Europe and around the world were sound. They joined the WTO, with assistance from us.

And since Mr. Putin made this decision around Crimea and Ukraine, not because of some grand strategy, but essentially because he was caught off balance by the protests in the Maidan, and Yanukovych then fleeing after we'd brokered a deal to transition power in Ukraine. Since that time this improvisation that he's been doing has getting - has gotten him deeper and deeper into a situation that is a violation of international law, that violates the integrity -- territorial integrity and sovereignty of Ukraine, has isolated Russia diplomatically, has made Europe wary of doing business with Russia. Has allowed the imposition of sanctions that are crippling Russia's economy at a time when their oil revenues are dropping.

There's no formula in which this ends up being good for Russia. The annexation of Crimea is a cost, not a benefit to Russia. The days, in which conquest of land somehow was a formula for great nation status is over. The power of countries today is measured by your knowledge, your skills, your ability to export goods to invent new products and new services, your influence. And none of those things are provided by his strategy. Now, but what is absolutely true is that if you have a leader who continually drives past the off ramps that we've provided, given the size of the Russian military, given the fact that Ukraine is not a NATO country, and so as a consequence there are clear limits in terms of what we would do militarily, Mr. Putin has not been stopped so far.

To those who would suggest that we need to do more, what I've said to them is that we can exact higher and higher costs and that's exactly what we're doing, and we can bring diplomatic pressure to bear. I don't think that it would be wise for the United States or the world to see an actual military conflict between the United States and Russia. What we are doing is reinforcing those border states who are members of NATO and making very clear that that line is one that cannot be crossed because we wouldn't have to, you know, take military action to protect our allies. That's part of what article five is all about.

ZAKARIA: But you've seen no indication that Putin is ready for a deal in recent months, weeks?

OBAMA: You know, so far what we've seen is a lot of talk in public. With Chancellor Merkel and President Hollande and ourselves, in which he will say one thing, but his actions tell another tale. And what we've consistently seen is that the separatists are Russian financed, Russian trained. Their strategy comes from Russia. Russian troops support them. And so we have not yet seen a recognition on the part of the Kremlin that it is in Russia's interest to resolve this issue over the long-term. So, in addition to continue to exact costs on Russia, one of the most important things we can do is to continue to support the Ukrainian economy and the reform efforts that are coming out of Kiev. And to their credit, President Poroshenko and Prime Minister Yatsenyuk have initiated significant reforms there that are making a difference if they are given a chance.

And so, we're going to keep on these dual tracks, putting more pressure on Russia, bolstering Ukraine, delivering a message to Mr. Putin that these off ramps and diplomatic resolutions remain available. I'm not wildly optimistic at this point that his orientation changes, partly because the one thing that's been very successful for Mr. Putin is his politics. I think he's been able to create in part because of state sponsored media and Russia TV and all the mechanisms he has to quell dissent inside his country and tapping into, you know, sort of the strong nationalism that exists inside of Russia. What he has been able to do is to keep his poll numbers up.

And in fact, a lot of his turn away from reengagement with the West was when he decided to start running for re-election and his popularity wasn't as high as he was accustomed to. And you will recall there were protests in Moscow that started numbering in the thousands. You started them seeing a ramp up of this anti-Western, anti-U.S. rhetoric, which is out of the old Soviet playbook. So he's looking backwards, not forwards. And perhaps over time he changes his mind. In the meantime, we just have to make sure that we're firm in protecting our allies and supporting the principles that have maintained peace in Europe for the entire post-war period.

(END VIDEO CLIP)

ZAKARIA: When we come back, more of my interview with President Obama. I've so far asked him to talk about Boehner and Netanyahu and Putin and Modi. Next I'll ask him about a man he should know pretty well, himself. How does he see his own presidency, when we come back.

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ZAKARIA: In the recent issue of "New York" magazine that asked how history would judge Barack Obama, the scholar Charles Kessler invoked a famous test used to evaluate great men. I put the test directly to President Obama.

(BEGIN VIDEOTAPE)

ZAKARIA: Clare Booth Luce once wrote that great men get one line. History has only time enough for one line for them, and it's usually a line with an active verb. So Lincoln freed the slaves, Reagan won the Cold War. What do you think your line will be?

OBAMA: Oh, I think one of the things I've learned because I've gotten this question from the day I first took office, I'm going to let somebody else answer that question, somebody probably more articulate and pithy than I am. But I can tell you that --

ZAKARIA: What are you most proud of?

OBAMA: Well, I'm proud of saving the American economy. And we still have a long way to go. Essentially what we did was stabilize it, lay a new foundation to move forward. As I said in the State of the Union address, that gives us now the capacity to tackle what was an overriding theme of my campaign way back in 2008, and that is to restore middle-class economics and the capacity for people to get into the middle class, and start seeing higher wages and a broader shared prosperity inside the United States. And I think we've moved the trend lines in the right direction, but we've still got a long way to go on that.

Internationally, I'm proud of the fact that we've responsibly ended two wars. Now, people will say, well, you're back in Iraq, but we're not back in Iraq with an occupying army, we're back with a coalition of 60 countries who are helping to stabilize the situation. We are working with Afghan national security forces to help stabilize the situation there. But we don't have 180,000 troops who are deployed in those two countries.

And I think that what we have also done is reflected the best values of America in trying to nurture this nascent democratic movement inside of Burma, in ending what I believe had become a counterproductive policy in Cuba, in strengthening alliances with countries like India, where there's just enormous potential. Sometimes we don't pay a lot of attention to it. But I've been paying a lot of attention to it, because I think that our future prosperity and security is going to be tied up with how are we doing with 1.2 billion aspiring Indians who share our values and share democracy with us. How are we doing in Latin America with countries that generally are more favorably disposed towards the United States than they have been in a very long time, in part because of the actions that we've taken. There are big chunks of the world. Asia Pacific region, where my commitment to rebalancing has led to not only concrete agreements and actions with ASEAN countries, for example, but has also sent a clear message to China that we want to be their partner but that they have to be part of a rule-based system rather than free riders or bullies because of their size and strength. And so one of the things that I've learned in this job over the last six years is that sometimes progress is incremental, but when I look at overall the steps that we've taken, I believe they are the right ones. And I am very confident that America is stronger, more prosperous, safer, and more influential today than it was when I took office.

(END VIDEOTAPE)

ZAKARIA: Up next, the president has a recommendation for you and for me. What is it? When we come back.

(COMMERCIAL BREAK)

(BEGIN VIDEOTAPE)

ZAKARIA: We usually end the show, Mr. President, with a book of the week. I usually recommend a book to the readers. I thought I'd hand it over to you, you are a voracious reader. What book have you read in recent months that you would recommend?

OBAMA: Over vacation, I read a book of short stories by Phil Klay called "Redeployment." And it's a quick but powerful and for me painful set of stories about the experience of ordinary soldiers in Iraq. And I think it's a reminder, particularly important for a commander in chief, that the antiseptic plans and decisions and strategies and the opining of pundits that take place in Washington, you know, is very different from war and conflict as it's experienced by people on the ground. And part of the reason that I am deliberate about decision making when it comes to foreign policy, and part of the reason that I do think it's important to aim before you shoot is because I've met enough young men in Walter Reed and talked to enough families who have lost loved ones to remember that there are costs to the decisions we make. Sometimes we have to make them, but they are real and they are serious. And we can't play political games and we can't engage in bluster or reaction or, you know, try to beat our chests when we make these decisions. If we're going to deploy folks to war, it better be for a darn good reason. We better have a very clear objective that is worthy of the sacrifices that these folks make.

ZAKARIA: Mr. President, pleasure to have you. Thank you so much.

OBAMA: Great to be with you. Thanks, Fareed.

(END VIDEOTAPE)

ZAKARIA: And that is the end of our show for today. Thanks for joining us to see my interview with President Barack Obama from New Delhi. I will see you next week.